Germany is losing its famous workforce efficiency: Chris Bryant

In the heart of Germany, a contentious debate rages as politicians and business leaders confront a sobering reality: their nation's workforce might not be putting in enough hours. With economic woes casting a shadow, voices like Finance Minister Christian Lindner and Deutsche Bank's CEO Christian Sewing are urging Germans to work harder. As demographics shift and productivity wanes, the call to unlock untapped labour potential grows louder. Can Germany preserve its economic prowess while embracing a culture of increased productivity?.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Chris Bryant.German politicians and business leaders, despairing a weak economy, are lately broaching a once taboo topic: claiming their compatriots don't work enough. They may have a point. .___STEADY_PAYWALL___.German Finance Minister Christian Lindner fired the latest salvo in this fractious debate last week when he said that "in Italy, France and elsewhere they work a lot more than we do." Economy Minister Robert Habeck, a Green Party representative, grumbled in March about workers striking, something a country beset by labor shortages "cannot afford." (Later that month train drivers secured a 35-hour workweek instead of 38, for the same pay.) Signaling his opposition to a four-day work week, Deutsche Bank AG Chief Executive Officer Christian Sewing in January urged Germans "to work more and work harder." .Trade unions reject any attempt to paint Germans (and migrants) as workshy, noting there are more people in employment than ever before, and millions work multiple jobs to support their families. .But you don't have to view Germans as lazy or complacent — I don't — to wonder if the country could do more to encourage people to fulfill their untapped labor potential, particularly women and those nearing retirement. Doing so would help Germany fund the energy transition and a generous social security system, amid unprecedented challenges to its growth model..Read more: 🔒 Germany is rich but its people are poor and fed up: Chris Bryant.Until recently, Germany appeared to have struck a fine balance between economic heavyweight and the good life, thanks largely to its highly productive manufacturing sector. Germans enjoy around 30 days of paid vacation compared with around 10-15 days in the US, for example. Yet output increased by an average of 2% a year during the 2010s, which is pretty good..Alas, this compromise is beginning to fray. Factors that contributed to Germany's past success — such as cheap Russian gas and Chinese demand for its exports — are fading. A slowdown in productivity growth and the wave of baby boomers set to exit the workforce is projected to lower potential output growth in the coming decade to just 0.4% a year, according to the German Council of Economic Experts. (Last week, the finance minister vowed to double potential growth and announced a 12-point plan to boost investment and employment, including restricting early retirement. Social Democrat partners in the coalition government were outraged.) .Around 1.7 million positions are reportedly unfilled out of a labor force of about 46 million, and the worker shortage could worsen unless more migrants arrive to pick up the slack. Although unemployment has increased in the past year, the 6% jobless rate isn't too bad considering the weakness of the economy. .Read more: The Far Right is on the rise in Germany: Unity Day rally highlights political fragmentation.Low staffing has become a vicious cycle. Germans took an average of 15 sick days last year, and these absences were a significant contributor to the country falling into recession. This partly relates to a post-Covid increase in respiratory infections, but deteriorating mental health is also playing a role; employees at short-staffed firms or institutions are susceptible to burnout, leading to more sick days, and so on. .Average annual working hours per employee were the second-lowest on record last year, which the Federal Employment Agency's IAB research institute attributed to sickness, fewer overtime hours and more part-time work..By one metric — average hours worked per employee — Germans are the least industrious of any OECD nation, and it doesn't rank much higher even if you consider hours per adult resident, which is a fairer reflection of Germany's success in boosting overall employment. Studies show Germans also work comparatively little over their lifetimes..International comparisons can be misleading because countries collect these data in different ways. Germany also scores badly due to high rates of part-time employment: Around half of women employees in Germany work part-time, compared with only 13% of men. (Full-time employees work around 40 hours a week, which is similar to the European Union average.) .Read more: 🔒 Germany just averted its own Jan. 6, and maybe the fourth reich.But in summary: Germany would be better off financially (and perhaps also holistically) if more women were able to work full-time — and many would like to! — and we retired later..Instead, due to tax subsidies for married dual-income couples, it can be financially disadvantageous for the person on the lower income (often the woman) to work more..And though Germany has committed to raising the statutory retirement age to 67 by 2031, many Germans take advantage of ill-considered legislation passed a decade ago allowing them to retire at around 64. While Germans still exit the labor force later than the French, on average, there's room for improvement. .To counteract the trend toward spending our final two decades without gainful employment, the government should link the retirement age to average life expectancy — now 78 for male newborns and 83 for women — with exceptions for physically arduous professions. Politically, this will be tricky, so in the meantime Germany should boost financial incentives for "silver workers" who opt to work longer. .Tax cuts for working overtime — as proposed by the opposition Christian Democrats, and by Lindner — are worth considering, but this is only one aspect of a bigger problem: Germany's tax system heavily penalizes wages, while wealth is taxed lightly. No wonder people don't see any point in working more..Germany has boosted funding for kindergartens and primary schools, which should help more women return to work. Kindergarten is free in Berlin and the state school my seven-year-old attends offers supervision until 6 p.m. if needed; however, as in other sectors, staffing shortages are a problem. .Germans can't just rely on productivity gains from artificial intelligence or tentative signs of an economic rebound. To ensure the next generation enjoys the same living standards and long holidays, many of us will also have to work a bit more the rest of the time..Read also:.Markus Jooste on trial in Germany next year – SARB also readying criminal case🔒 Financial Times perspective: Germany turns to coal for a third of its electricity'If I were in Jooste's shoes, I'd fly to Germany' – life in their prisons would be far easier than in SA, says O'Sullivan.© 2024 Bloomberg L.P.